Hargreaves Lansdown launches Share Exchange to help UK clients shelter investments from tax

Rick Steves

“HL’s new online service makes this quick and easy and is available on over 11,000 listed securities. For many transactions it’s cheaper, with no bid/offer spread, and for overseas shares there’s no foreign exchange charge.”

Hargreaves Lansdown has launched HL Share Exchange, a service that makes it quicker and easier for UK clients to protect their investments and use their tax-free allowances.

HL Share Exchange allows clients to sell shares in their general investment account, move the cash into a Stocks and Shares ISA or SIPP as part, or all, of their annual subscription, and buy back the same shares in the ISA or SIPP with a simple online instruction.

The firm used a hypothetical Susannah as an example: She acquired 5,000 SPC plc shares at £5.60, now £8.40, a profit of £2.80 per share. In this case:

  • she can share exchange 2,380 of these shares in her ISA which will use £6,664 of her £12,300 CGT allowance, and £19,992 of her ISA allowance.
  • she can also transfer 2,380 shares to her husband Alex who can also use share exchange, using £6,664 of his £12,300 CGT allowance, and £19,992 of his ISA allowance.

The result is 4,760 of the 5,000 shares sheltered in their ISAs free from future UK income and capital gains taxes, Hargreaves Lansdown explained.

HL Share Exchange features:

• An online service that can be completed in two simple steps
• A much quicker turnaround time for processing instructions
• Execution at the mid-price, meaning that the client does not pay any bid/offer spread, saving them an average of 0.1% on FTSE 100 shares, 1.2% across the FTSE All Share and 6.7% of FTSE AIM shares
• No charge when selling the shares in the general investment account
• No foreign exchange charge for overseas shares
• A charge of £11.95 or less to buy shares back in the ISA or SIPP
• Stamp duty on the repurchase of UK shares (of 0.5%)
• Available on all UK and overseas shares, ETFs and investment trusts, a total of 11,527.
There’s a fee for holding shares in a Stocks and Shares ISA or SIPP. This is 0.45% a year capped at £45 for the Stocks and Shares ISA and £200 for the SIPP for all shares held in those accounts.
In recent months, HL has put more power in the hands of retail investor by:
• Launching free voting across UK and European shares
• Making secondary fund raising and IPOs easier through a partnership with REX/ Retail Book
• Supporting changes to the prospectus regime, which should improve retail access to IPOs and secondary fundraising rounds.

Cheaper, no bid/offer spread, no FX charges

Tom Lee, Head of Trading Proposition, Hargreaves Lansdown: “We are pleased to announce another way our service puts more power in the hands of retail investor. Given the cut to the capital gains tax (CGT) and dividend allowances coming in April this year, the benefits of Share Exchange to shelter your investments from tax are even stronger. HL’s new online service makes this quick and easy and is available on over 11,000 listed securities. For many transactions it’s cheaper, with no bid/offer spread, and for overseas shares there’s no foreign exchange charge.

“Shares held outside an ISA or SIPP are subject to UK income tax and capital gains tax, but when shares are held within a Stocks and Shares ISA or a SIPP, you do not pay either of those. You also do not need to declare income or gains from investments held within a Stocks and Shares ISA or SIPP on your tax return. Married couples can also transfer shares between each other without triggering capital gains tax. Between them they can generate gains of £24,600 using this tax year’s allowance CGT free.”

Cliff Weight, Director of ShareSoc, said: “This is a compelling offer, particularly when you realise the account fee for holding shares in their ISA is capped at £45. This is another positive step from Hargreaves, coming on top of their recent voting announcement, which added another 1.75m investors to the existing ranks of this who can vote their shares online. Both are positive changes for shareholder rights.”

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